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India pricing itself out of business?


Are hotel tariffs scaring away inbound tourists?

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Jan 14, 2008

Mumbai - Travel and tourism industry is worried that the high hotel tariffs in India may see inbound travellers opt for Thailand, Cambodia, Vietnam and other South East Asian destinations. But key players in the hospitality industry remain unmoved.

The number of inbound travellers will decrease largely because of higher hotel rates in India, Mr Madhavan Menon, Managing Director of Thomas Cook India told Business Line. “Malaysia, Vietnam, Thailand, Cambodia are still cheaper than India… they would rather go in from the US or Europe to those markets,” he added.

The impact is likely to be seen in the next season, from October to April of 2008-2009, he said, adding, “Strengthening rupee is also not helping.”

Mr Arup Sen, Executive Director of Cox and Kings India, expressed similar concerns. “Hotel rates in the cities are about $350-400; this is due to demand from corporate traffic. As a result, tourist traffic ends up paying a higher price,” he said.

Lack of fresh destinations due to limited infrastructure would pose yet another challenge for Indian tourism industry in the coming years, said Mr Menon. However, he added, “When it comes to billings, they are higher because hotel rates have gone up.”On the other hand, Mr Raymond Bickson, Managing Director and CEO of Taj Hotels, Resorts and Palaces, termed such concerns as being “overly pessimistic”. “We only have 4.5 million tourists for a market which is so large. We have 86,000 rooms in a country, which is less than that of Manhattan (1.1 lakh rooms). India can easily support double the inventory that exists today,” Similarly, Mr Chander Baljee, Chairman and Managing Director of Bangalore-based Royal Orchid, said, “Room rates are dependent on the demand-and-supply situation. I do not see any concerns for the future of inbound travel.”

But while the business travel segment looks good, it’s leisure travel that’s affected the most. “To some extent we all want higher room rates, because it’s the business travel segment that will gain the most in a booming economy like India. And companies are not so price-sensitive as compared to an individual traveller,” said Mr Romil Ratra, General Manager of Intercontinental Marine Drive, Mumbai, which gets a majority of its revenues from corporate travel.

Will this scenario continue in the long run too? Mr Siddharth Thaker of HVS International — a global consulting and services organisation focused on the hotel, restaurant, shared ownership, and gaming and leisure industries — has this to say: “There has been an increase of 300 per cent in the average room rates in the last two years. And we are already seeing a scenario where companies prefer corporate guesthouses or three-star, four-star category hotels for their travelling personnel.”

thehindubusinessline.com

Are hotel tariffs scaring away inbound tourists?
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